The introduction of AMM has been arguable the longest awaited upgrade of Stellar Protocol 18. Designed to inject more liquidity to Stellar markets, this new feature allows holders to make deposits in pools of token pairs and get rewarded for the transactions made by the selected market maker. Nonetheless, a scarce 0.3% transaction fee distributed among the liquidity pool members, has not been an incentive to be too excited about. Well, up until now…
Since the release of AMM, our holders consistently demanded bigger returns for locking their BRAVE tokens into our liquidity pools, as some other crypto players do. Purposely, we didn’t rush to this liquidity rewards party. Provided the implications of this decision, we wanted to be extra cautious. We analyzed multiple projections and scenarios to be 100% sure that the mechanics adopted would have a positive impact in the project and guarantee long term value growth. In fact, with the launch our re-designed rewards system, every new incentive in our ecosystem must comply with three guiding principles:
- Eliminate fraud by design
- Reward longer term commitments whilst ensuring flexibility
- Foster adoption and coin value growth
Today we are pleased to introduce BRAVE liquidity rewards. This new program rewards holders providing liquidity to the market in the BRAVE-XLM liquidity Pool.
Joining the liquidity rewards program is very simple:
- Search the BRAVE-XLM pool in the AMM section of any stellar exchange or at BravePay.net ( https://tools.bravepay.net/amm )
- Connect your wallet and deposit amounts in the selected pool. Bear in mind that the deposits on each pair should have equal value. For argument sake, for every dollar in BRAVEs a dollar in XLMs should be added.
- You will be all set.
About Liquidity Pools
Think of a Liquidity Pool as Fund that operates in the crypto market, buying and selling two pairs. For every transaction made, Stellar sets a fix premium of 0.3% that goes straight to the pool. This is how the pool makes profit.
But how are the rewards distributed among the pool participants? Stellar distributes those fees generated by the pool proportionally to the individual contribution to the total Pool size (individual pool share).
Individual pool share = User’s contribution to the pool / Total pool size
Unlike Tokens or Company shares, the individual pool share is dynamic, it grows or shrinks as the Pool size and or the individual contribution evolves:
Individual Pool share grows if:
- The Total Pool size shrinks and user amount in the pool stays the same or increases
- The Total Pool size stays the same and the user amount in the pool grows.
- The Total Pool size grows and the user amount in the pool also grows at a higher proportion.
Individual Pool share goes down if:
- The Total Pool size grows and user amount in the pool stays the same or decreases
- The Total Pool size stays the same and the user amount in the pool decreases.
- The Total Pool size decreases and the user amount in the pool decreases at a higher proportion.
BRAVE Liquidity rewards
BRAVE liquidity rewards improves Stellar’s 0.3% fee baseline, adding an extra 10% of the pool size in BRAVE rewards. This additional incentive is allocated for daily distribution as per the following formula:
Total daily rewards = (Total BRAVE pool size x 10%) / 30
The bigger the amount in the pool, the bigger the daily rewards distribution. This approach fosters the growth of the liquidity pool which is beneficial for both coins in the pool.
Remember that BRAVE liquidity rewards are paid daily via transfer to the Stellar Address of pool participants. This gives more flexibility to the holder and also opens up the possibility for smart investors to re-invest the daily rewards received, pushing the growth of the pool and thus the future earnings received.
A practical example.
Please find bellow a simulation of the return for a BRAVE-XLM pool with 10 million BRAVEs size, 100 members with equal shares and 10 million BRAVEs of monthly transaction volume.
Get in touch.
For more information about BRAVE, our products and rewards, please join us on:
Official Website: https://BravePay.net
Telegram (ENG): https://t.me/bravecorporation
Telegram (ESP): https://t.me/bravespain
Telegram (GER): https://t.me/bravegermany
Telegram (ITA): https://t.me/braveitaly